Reportable Transactions (Federal Law)

In accordance with Section 6011 of the Internal Revenue Code and the regulations issued thereunder, any taxpayer that has participated in a "reportable transaction" must file a disclosure statement ( IRS Form 8886 ) with the IRS describing the transaction and the extent of the taxpayer's participation in the transaction. For purposes of these rules, "reportable transactions" include the following:

Listed Transactions (including transactions that are substantially similar thereto, construed broadly in favor of disclosure).

Confidential Transactions (transactions offered to a taxpayer under conditions of confidentiality to protect the advisor's tax strategies and the taxpayer pays a minimum fee of $250,000 for a transaction involving a corporate taxpayer and generally $50,000 for transactions involving noncorporate taxpayers).

Transactions with Contractual Protection (transactions in which a taxpayer has a right to a full or partial refund of fees in the event the intended tax consequences of the transaction are not sustained, or if the transaction's fees are contingent upon a taxpayer's realization of tax benefits).

Loss Transactions. A transaction will be considered a loss transaction requiring disclosure as a "reportable transaction" if it purports to give rise to a loss under Section 165 of the Internal Revenue Code of at least $10 million in any single tax year ($20 million in a combination of tax years) for corporations, or a loss of $2 million in any single tax year (or $4 million in a combination of taxable years) for transactions involving individuals, S corporations or trusts. A five-year window from the year of loss, going forward, is utilized when determining these thresholds.

(NEW) Transactions of Interest (effective for transactions entered into after November 1, 2006). For more information, see "TRANSACTIONS OF INTEREST."

(OLD) Transactions with a Brief Asset Holding Period

NOTE: The disclosure request for Transactions with a Brief Asset Holding Period was eliminated for transactions entered into in or after August 3, 2007, but this does not relieve taxpayers of any such disclosure request for transactions of this type entered into or before this time. See also, Rev. Proc. 2004-68, 2004-50 I.R.B. 969 (list of exceptions); Regulations 1.6011-4 (in effect prior to August 3, 2007).

(OLD) Transactions with Significant Book-Tax Differences.

NOTE: The disclosure request for this category has been eliminated. IRS Notice 2006-6. This does not relieve taxpayers of a disclosure obligation using IRS Form 8886, for such transactions that should have been disclosed on a return prior to January 6, 2006.

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